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Voted up. Articles like this will bring out a lot of people going on about being financially responsible. There are a lot of people who don't know how or will not manage their money well. There is also a new reality, like yours, of people who would but their circumstances don't allow it.

True enough. Financially responsible != wealthy. My wife and I have lived paycheck to paycheck for nearly the last decade. We've been as financially responsible as possible, with assistance from family, and just now are we starting to build wealth and pack money away. It takes money to make money.

My parents didn't teach me much about money because they didn't know much themselves. I think school was the same, although I learned a little about compound interest in a high school business classes but without the other knowledge to make enough money to save money, knowing about compound interest doesn't really help you much.

Thankfully, I got it figured out by my mid 20s. But most people don't figure it out until much later, like my parents. I still give them financial planning advice and they don't listen. Then they give my brother conflicting advice to what I give him. Even when I show him the numbers and how things work, he listens to them (and I'm pretty sure I now have close to my parents wealth at half their age).

If you're reading this, always ask your richest friends or family members for advice when you go to make big financial decisions (loans, credit cards, paying off debt, investing). This should seem obvious, but I see people do it all the time: don't ask broke people for money advice or take money advice from broke friends. The richest people are often the most frugal.

We're in the latter... We barely make enough right now to cover our monthly expenses which include a (so low you'd strangle us) mortgage, utilities, student loans, food, and gas... We eat out maybe once a month, if that, no car payment, no entertainment costs, we don't have cable, I have to have phone and internet at home for work (I work from home) and my husband has to have a cell phone from work (which the job chips in $30/month to help cover half the cost). After all that, we barely break even, have had to dip into our savings to cover emergencies (we're down to $2,000 there) and we've wracked up a $1,500 credit card bill just to buy our groceries.

I'm fucking tired of the American dream relying on fucking food stamps. What people fucking need is decent fucking jobs that pay fucking decent. No one, no nation, ever realized their dreams by drawing themselves into as small a ball as could be imagined. This isn't a criticism of you in particular, it's a criticism of the whole fucking culture that believes if you just "get smaller," you'll be bigger. Food stamps. HOW ABOUT A COUNTRY THAT ENCOURAGES GROWTH AND PROTECTS DECENT JOBS?

A lot of it has to do with the fact that no one in the united states is making near the same amount of money now that the people who are now retired used to make when they worked. The inequality in this country is insane. Technically, based on the cost of living, we should have a minimum wage of 14 an hour. they upped it to 9, but that doesnt do enough. at 9/hr in many areas of the country, wont even cover living expenses. Especially in states like california.

I hear ya! Living paycheck to paycheck cuts into your retirement planning. And having a job that doesn't match or contribute to 401K.
However, I don't see this lasting more than 2 years (kids out of daycare then). Then I can focus on retirement.

Yeah, we have two right now... and one is a baby so they are more expensive. One goes to kindergarten this year, and the baby will move up to toddler (less money). I do see the light at the end of the tunnel.

The only reason I'm able to save anything is because I'm single, no kids, and I have a roommate. And even with that it's been a bit rough. $1300 in car repairs in December, and I just finished paying off $800 out of my own pocket for dental work (half of which was covered).

Wow, there's an awful lot of win in this thread, including your comment. I have two philosophies that support your contention (that you should prioritize retirement saving over saving for your kids' college).

First, not every child will even go to college, or require college funding. Some will join the military. Some will get full-ride scholarships. Some will become an apprentice tradesperson. Some will enter the workforce straight out of high school.

Second, and more importantly, you simply cannot help others - including your kids - if you yourself are in a position of weakness. As an example, my wife and I focus a lot of our finances on keeping our household "stable." In other words, the mortgage gets paid, always. The utilities get paid, always. The house is in good repair, always. There's a well-stocked pantry, always. This has many times, allowed us to assist friends and family members who are in trouble. It's actually a far better help for needy folks than simply giving them money...although we've done a little bit of that, too.

First, not every child will even go to college, or require college funding.

I generally agree with you, although to this one point I should add that people who are saving enough for their retirement can put money into a 529 education savings plan and if their kid doesn't use it then it can be rolled in your retirement savings (taxes will be incurred but you can do it when you're retired so your income will be really low anyway)

The best thing you can do for your children is not be a financial burden on them when you are old. Getting old is expensive. My grandmother did not save nearly enough retirement. Now, at $8k/month for a non-shitty or abusive retirement home (she is a schizophrenic with numerous physical issues to boot), she is costing us more than ever.

I would have rather taken on 4 years of loans at a state school than deal with this.

This is my biggest financial worry. Not my own retirement (although that's up there on my list--I'm saving for it at least), not my child's education (I think she'll be fine regardless of my help--I was), but my mother's financial situation.

She is terrible with money. She doesn't have health insurance let alone retirement savings. I completely see her becoming a burden on me in the future and I'm not even sure I'm willing to allow that. My only hope is her fiancee. He seems to be at least better with money than her (which isn't saying much but it's an improvement).

I think you're both partially right. For us, our college plan for our kids, the first of whom will be born in a few months, is "Well, let's hope the way we pay for college changes by then." I've done the math; if college costs suddenly started growing at only the rate of inflation today, we'd STILL need to be socking away more more than 10% of our annual pre-tax income just for college in order to pay for it all ourselves. And we're pretty well-off financially. If our financial situation doesn't change, we won't be able to save more than a drop in the bucket - probably just enough to disqualify the kids from federal aid. It's pointless. So we're focusing on our retirement, which given the longer time frame is less impossible, though we're still depending on future income increases and decent market returns to have any hope of saving what we need. And let me repeat: we are well off compared to most of our peers.

No, there's nothing wrong with thinking this way, it's just not a complete picture. There are other things kids with no college fund can do besides loans; they can join the military, they can co-op, they can live at home, work at Arby's, and go to community college. They can get merit scholarships. They can work for a place that will help you with college.

At some point in your life, if you live sufficiently long, you will not be able to work. At that point, you are screwed unless you have a retirement fund - Social Security is great, but I'm sure I speak for many of my generation Y that I ain't counting on it. There are much, much fewer options for a broke 75-year-old with arthritis than there are for a broke 22-year-old.

So, people are right to prioritize retirement savings over college funds for their kids. Not that they should completely neglect the latter; I have two kids myself, and am hoping to send them off with enough to cover state university tuition for the first year, something to the tune of $15-20k not accounting for inflation. After that, they will have to make their own way.

A lot of 18 year olds don't have the financial knowledge to fully understand the loan documents they're signing, I agree, but that is why parents or other adults need to help high school seniors make these choices.

The conversation about college should include a discussion of costs, of future earning ability with a particular major, and modeling out what a student's future loan payment might be in the future if they take out X amount.

I honestly think people are bad parents when they send their kids off to expensive private universities, funded by loans in their kids name, so the kid can end up in six figures of debt with a major in anthropology or music. You don't have to pay for your kids' education to be a good parent, but you shouldn't help saddle them with that kind of debt.

The majority of states in the U.S. have public universities with annual tuition under 10k. There is no reason at all that someone should need to take out six figures of loans to attend a public university for a 4 year degree. I don't even think more than 60k in loans is reasonable for a university like that, because working part-time during the school year and full time in the summers should cover most of someone's living expenses as a college student with a couple of roommates.

First, I think you should definitely worry about retirement more than kids college.

Secondly, student loans are NOT necessarily inescapable. About 40% of people who actually try are able to get their student loans discharged in bankruptcy. You have to demonstrate that it is not financially possible (e.g. it would impact your ability to purchase food, shelter and basic needs) and get a judge to agree, but it can be done and it's a far cry from being literally impossible.

That said, yes, they are hard to get out of and student loans can absolutely be financially devastating for many people. But, as a parent without the ability to fund your child's education, you don't have a lot of choice and you can do a lot to make sure your children come through it in good shape. Notably, you need to steer them to make smart financial choices in school.

Your kids can spend 2 years at a community college and pay for it out of pocket with a part time job. Then they can transfer to the local state school and pay most of that with a part time job, especially if they get scholarships. They can live at home if possible, or live frugally in a shared apartment, and keep costs down.

I think it's entirely possible to graduate from school with minimal debt, however it requires rethinking what many people encourage kids to do. With the new economic realities and costs of education you have to stop telling kids they should follow their dreams and try to get into some prestigious private school that will end up with them graduating with $100,000+ in debt. As I've been telling my daughter, you have to consider the cost/benefit. While it's great to follow your dreams, you also have to realize that your dream probably does not involve paying off student loans for 30 years and perhaps you just might be happier with a more modest dream...

split the difference: parents live near higher edu institutions and let the kids live at home free room and board while they attend; financing the tuition themselves (loans, cash upfront, whatever). If the kid wants to go out of state or across the state that's on them to fund.

There are absolutely situations where it's impossible for parents to help their kids with college. But, from a current college student, I am so incredibly grateful to my parents for doing so. They managed to pack away $50,000 for me and I've spent it relatively well. They also cover my books, so I cover my food and some things I don't want to ask them to pay for. I am very very lucky, and I'll be able to enter post-college life with little to no debt and some equipment I need to get my career started. If it's possible, it's the greatest gift you can give your kids in this economy.

But look at what you get for your money! Four years of partying and fun before having to face the fact that your degree in Eskimo Studies ain't gonna qualify you for a job doing anything better than asking me whether I want to add curly fries to my order.

The college education bubble was caused by the magical thinking that because so many successful people have degrees, degrees must make people successful. So the government made plenty of cheap money available so pretty much anyone with a pulse and three brain cells to rub together could get a degree in something, and the result is huge colleges with massive payrolls spending huge sums on things like on-campus spas, to attract more of those people who an get college loans.

And you wind up with the US having the most degreed and indebted pizza delivery people of any other industrialized nation. Hooray for us.

My wife went back to school to become a doctor after doing cancer research for years. We are now $300k in debt from 4 years of student loans.

Of course, 5 years from now after her residency is done her income will make this repayable. I'm not complaining (although it sucks in the short term). I'm just saying $500k to get from undergrad through a professional degree is not crazy, especially a few years in the future of costs continue rising.

50% match is pretty good. I got laid off from a job where the 401k contribution was essentially a 1:1 match up to 5% of your salary. Now all the places I'm interviewing are all smug about the "generousness" about their 15% match of your contribution. So if I contribute $1,000 they'd toss in $150.

I do the max contribution, drive an old car, live frugally, have no debt, and have significant retirement savings already -- and yet I still relate to the feeling of futility described in this article. One major health care crisis could wipe it all out in an instant. Or the economy could totally collapse and wipe it all out.

One major health care crisis could kill you. You do what you can. Sage financial decision making is not going to guarantee that things go well for you, financially or otherwise, but it will somewhat ensure that they go as well as they can.

I think one of the major issues with 'recovery' in this sense is that we keep focusing on the number side of economics and not the psychological side of economics, and 'recovery' has its psychological side as well (bubble economy as socially traumatic experience) and this time around, this particular 2008-2009 bubble, was the first bubble economy that occurred during widespread social networking.

The result is that 'the personal is made political' is more true than ever before: one person's even downright bad luck ("Shit happened, then more shit happened, then my savings were wiped out, then I got sick") is now online for EVERYBODY to see, point to, and do anything from attacking the person for playing the victim, to attacking society as a whole for creating a victim, and all the debates and personal conclusions in between.

And whereas the recession was a very real thing and affected the country in very real ways, I can't help but wonder how many of those tales of woe would have happened anyway, life lacking the warranty guarantee that we expect of it, at which during 'richer' times people would have said, "Ooo, bad luck, I'm really sorry all that had to happen to you," instead of, "Well obviously you don't know shit about capitalism" or "Well obviously this is what happens in capitalism."

From the personal side, you go about your life under the assumption that you won't get killed crossing the street. The government legislates traffic to try to reduce instances of people getting killed crossing the street. But people will get killed crossing the street on occasion, period whatsoever that's life. You can't blame either the person for crossing the street and then failing at the endeavor, you can't blame the government for not going as extreme as removing all cars evar, and you shouldn't fear crossing the street yourself. You have to operate without fear of crossing the street because otherwise you'll never get anywhere.

An injury could keep me out of the gym long enough to undo years of work. You can plan the perfect outdoor wedding and it can rain. You can spend all weekend detailing your car only to have a cement truck run into it the next day. You could spend 8 years perfecting your guitar playing ability only to have your hand bitten off by a seal.

It can happen with money like it can with anything else. Just the way of the world.

Beyond savings/investment my true retirement plan is "be certain I could handle living off of social security" since that is the closest thing to a guarantee in this world (unless the GOP guts it in loving memory of Ayn Rand)

The stock market busted for my Mom's retirement (due to cancer) and she got hit with a $15k bill for a hospital stay that was supposedly not medically necessary during her recovery.

She's more frugal than this entire subreddit combined, but a few missteps and yes the healthcare industry would've sucked her dry.

I'm honestly considering a cyanide pill as my retirement plan. Having watched my grandmother go through a ghastly demise even after carefully saving for retirement, it sounds morbid as hell but it would beat "living" for years as an 80+ year old sickly person in wretched conditions.

You are correct. It varies by state, in my state you need the policy for 2 years and you can't be deemed to be defrauding the insurance (i.e., you can't intentionally buy a policy, wait two years and off yourself; but if you're depressed and kill yourself it still pays off).

It makes me proud to be an American, knowing that he paid into the system and now he's living off of it. He was working up into his early 80s and loving it. He just never made the money some people had.

In my last job there were 5 us all with the same job title making loosely the same salaries in the high 5 digits. No one had kids, only one guy was married. Our quarterly bonuses were sizable and every 3 months a discussion would start out about "What are you going to spend your bonus on?". I always had to ask "Where did your salary go? What could you possibly want that you don't already have enough money for?"

This. I make a decent salary at my company. My secretary, who's very open about her finances, told me that she makes about 10k less than me.

She has a son, goes to school, is twice my age, barely contributes to her 401K, and gets a BRAND SPANKING NEW car every 2 years...

Meanwhile, I drive the car that I had when I was an undergrad (because it's a good car). In the time that I've owned that car, she's purchased THREE NEW CARS (while of course selling her 1-2 year old car from the previous purchase).

She also bought a new ipad when it came out. QVC-aholic.

Meanwhile, I sock 13% into my 401K (pretax), and another $100/wk into my savings so I can put a down payment on a house one day, and keep my credit cards relatively empty.

WTF??? I'm not "good" at being frugal, but shit - you can't piss your money away when you have all these obligations.

I can't even make student loan payments because I make about 50% of the median income for my job description... I have a feeling that depressed wages have something to contribute to the discussion, over and above bad financial decisions.

Well depressed wages are DEFINITELY a reality...I have a buddy who is barely scraping by at 20K (with a degree, dean's list, all that). He's happy because he has insurance, but he just found out his dad was helping him out with his loan payments. He can't imagine where he'd be if his dad wasn't making sure that the loan envelopes that went to his parents' house weren't being taken care of.

BUT - to his credit, he lives frugally. He doesn't buy new cars (drove his last car into the ground, current car was a wise, used purchase). His "vacations" are when he drives 140 miles to hang out with me for the weekend, or take the bus to the city.

He knows exactly what he's capable of, and lives at that level. He has no credit cards. Since he's not an idiot with his money, and I have the means (and he made the effort to drive all this way), I take care of all the rounds of drinks.

True, but if he had a few credit cards, he could "play around" with another $15,000 or so...

This reminds me of another college graduate friend who can't hold down a job, she gives up her plans when her passion wanes even a little, bitches about being in credit card debt constantly, thinks she's above working grocery-type jobs (but at least she begrudgingly does), and still blames George Bush for why she's so poor...

I was wondering how he got to a point where he "just found out" about his dad helping him. Did he not understand how his loans would work and when he'd have to begin paying them? (Financial Aid usually does exit interviews with this information but in the flurry of graduation it's easy to forget). Did he think he'd fooled the loan company?

Try being married to a guy who kept insisting "we make too little to budget"....

15 years of marriage, 3 kids, he always made about 25-28k a year. Spent every dime, and drove up bills. Ended up homeless because we were "too poor to save".

Been divorced 4 years, I make less then he ever did, still have the kids, and no child support till this year. I should have a mortgage by this time next year, and I have some retirement savings. Plus... no debt. NONE! Zero, ziltch.

Saving is just a matter of deciding whats important. That new car, or having a home of your own.

They buy new cars, but it's not just the car purchases. They spend $2 and change on Dunkin Donuts coffee that they had to wait in a 10 minute line for on the way to work, they don't pack their lunch, etc. The stupid choices that average people make on a daily basis add up to a lot. I think I've seen that bit about cutting out your morning latte to save $500 a year about 1,000 on the internet, but it's true. Find 10 more things to cut out like that and you've got a Roth IRA maxed out. It's really not rocket science if you're making much more than the wages that the lowest workers (walmart, mcdonalds, etc) make. If you aren't on the bottom you should always be able to afford the lifestyle of people below you on the socio-economic ladder while still saving a little bit.

I don't see how its difficult to contribute 5% pretax to your 401k, max your Roth IRA and have a new car. I'm frugal so I can have nice things when it matters, not so I can be feign poverty for a feeling of self righteousness.

The only way to save for retirement is to start early and put whatever you can manage into it which my parents really pounded into me. They didn't take it seriously and now my Dad isn't in great shape but I started a 401k at 22 and contribute 10% of my income to it, roughly $300 a month. Now at 27 I have almost $27,000 in my 401k and another $35,000 in mutual funds I saved for when I was living with my parents. But I also started working at 20 and my parents covered my education since it was part time in the evening and pretty cheap.

One can only hope. I also have the added benefit of attaching myself to a wonderful workaholic girlfriend in the last couple years who is on the brink of getting a master's degree and going to work for an internationally known apparel company so a little bit of the pressure is off :)

Wow, you're lucky. My parents tried to drill the same into me but I pretty much ignored them, dicked around with my money, and partied for 3 years or so after college like an asshole. They also covered my college education, which I appreciate more and more as time passes.

I'm 27 as well, and finally started getting my shit together financially about 2 years ago. I've got just under half as much saved up as you. You're in very good shape.

Not having student loans is absolutely amazing and I've tried to take advantage of it as much as possible. I only just moved out of my Dad's a couple years ago and it took a year or more for my to figure out how to spend responsibly while living on my own, that shit is tough. The only saving grace was that my family never ingrained fast food or take out as a viable option for eating so when I was feeling lazy I would just make a pot of rice and throw some egg or beans in it.

Nice! I started saving at the beginning of last year (when I finished paying off my student loans) and I have almost 10K in there (I hit 10K next month. I'm pretty excited)!

I know there are people out there who legitimately do not make enough to save, but there is probably more who are buying all name brand clothes and stuff. I say this because most of my friends make a lower income than my boyfriend and I, but they spend way more money on consumer goods. My focus on money is travel and retirement, so I don't spend to look rich.

I know there are people out there who legitimately do not make enough to save, but there is probably more who are buying all name brand clothes and stuff. I say this because most of my friends make a lower income than my boyfriend and I, but they spend way more money on consumer goods. My focus on money is travel and retirement, so I don't spend to look rich.

I've only hit a point of diminishing returns in the last year or two but now that I'm about to finally get my degree my salary should catch up to my age. A lot of my high school friends went to school full time for engineering and in the last couple years started moving up the chain and essentially doubling my salary. Of course, every single one also pumped those extra gains into a house and are planning to start families so even with that extra income they probably won't be saving.

And that's the problem. They get extra money so they find things to spend it on. I can afford to buy quite a decent place, but my plan is when I buy that the housing costs TOTAL (heat, hydro, insurance, property tax, etc) will cost no more than 25% of my income. Likely that means I won't have the nicest house with all the latest upgrades (at least initially) or an overly large house. This doesn't bug me though, because retirement (in fact early retirement) is a major financial goal I have in my life and I won't let social pressure to spend change that for me.

For a good portion of my life (I'm 23), my parents had told me to start saving money (even just a bit every month) and place it into savings of some sort. After doing some research and looking into it, I started investing 10% of my paycheck into my company-matched RRSPs and another 10% into a TFSA account. I also put about 5-10% into a separate "flexible savings account" that I can use if I want to travel, but that I can grab and use if I lose my job, need to fix something in an emergency, or pay for medical bills.

As of a few days ago (I started saving like this about 4 months ago), I had $1500 in my RRSP account, $800 in my TFSA account, three months of savings in bills and funds, $600 in my flexible savings account and almost no credit card debt.

Even just re-structuring some of the things that I was spending money on and putting that money away has been helping.

I haven't structured it that much but I squirreled away a similar percentage of my paycheck for years. When my business first started offering the 401k I contributed 30% for about a year to give it a quick jump so it could start hopefully earning money a bit more quickly. Then I moved into my own place which forced me to drop that 30% down to 10% but I always make sure to keep at least two months, and I'm only really comfortable with three months, salary in my bank account. Over the years I've trained myself to think of my bank account as being $X-$two months so even if I have $6,000 in my account I only ever think of about $600 of it as spendable money.

As long as you can keep up with all of the incremental savings you will always be in a better place. I just adjusted my lifestyle to meet a paycheck that is 10% smaller which hurts sometimes but it isn't really that bad since I'm without kids or a mortgage. I also bought a car with about 14,000 miles on it and paid it off in two years when I was living with my parents and it has been going strong for the past seven years, probably one of the better investments I made.

On the contrary, this could be one of the most important moves that future you will be thankful for.

What I meant was that 23 in contrast to 22 or 21 isn't a big difference. In contrast to 18, when I didn't even have the money for a minimal contribution, it might be something, but I didn't have the money then.

Be sure to check out [1] /r/personalfinance, and for new investors I always recommend the link [2] Long-Term Investing Start-Up Kit.

Was already on there ;-). I'd been planning this for a while but the link reminded me to up and do it.

Once the transactions clear I'm opening a Vanguard brokerage account, too. As long as I'm going to have a bunch of nonactive savings I might as well put it to work.

Sounds like a good plan. With a Vanguard brokerage account, you can buy their ETFs with no commission. Vanguard ETFs have the same expense ratios as their equivalent admiral shares, but the only minimum investment you have to worry about is the share price which is nice.

So why does anyone go with Vanguard's traditional mutual funds over their ETFs? What's the trade-off?

If I remember right, some funds aren't available as ETFs, but any reasons other than that? Right now all of my funds are in Admiral shares, but I'd like to open up some more funds and I wouldn't have enough to spread around to keep Admiral shares in all of those funds.

I'm relatively confident that my dad has saved enough for reitrement, which is a big relief for me because it means I won't have to spend a bunch of my money supporting him, which would then put me in a position to need my kids to help me, and so forth.

honestly it seems like the concept of "retirement" is a pretty recent one, that may have been a possibility for one or maybe two generations. Moving to florida and playing golf for your last 20 or 30 years is a pretty luxurious expectation.

Seems like we are going back to the previous several thousand years where people relied on their children and scraped by through old age.

this post just reminds me of the one the other day about how a person with $5 in their pocket and no debt is wealthier than (iirc) 25% of americans. I hate feeling like I should be thankful to only have $30k of student loan debt.

I only have about 20k, but if you can't afford to pay it when they demand you pay it, it may as well be 100k to you. But I won't be without money forever. So they can just ding my already bad credit until I make an amount that I can feasibly pay them back.

I had a really good nest egg started early in life and lost most of it in the tech bust. Then I had another good start, and lost it in the divorce. Then I had another good start, and lost a good chunk of it in the crash. Then I lost my good paying job, and since I'm getting gray in a smaller market and have 4 kids to raise that I can't move, I'm finding that I'm kind of locked out of both the job market and retirement saving. If you have retirement savings, good on you, but consider yourself lucky.

I'm getting kind of tired of all these people saying "with the recovery under way". Recovery for who? It seems like the only thing that's recovering is numbers on stock tickers and charts - everyone else in the real world is still sufffering.

I feel so so so so fortunate right now. A year and a half ago I was working a job where I was living paycheck to paycheck. I couldn't pay any of my student loans and was growing in debt.

Now I have a job with a retirement fund (where I contribute 5% of my pay and my employers put in 10%), free health care, and good pay. At 27, I realize that I am ridiculously lucky. I was even able to reopen a savings account this year after having to use it all during college.

Only one of my friends also has a retirement fund, very few people my age do. Watching my parents struggle with money, knowing they have hardly any retirement funds, I feel so incredibly lucky.

Wages have stagnated. Unemployment is still high. Healthcare, education, and housing costs are all rising faster than wages are. Elizabeth Warren talks about this in her books, the cost of some things (food, for example) take up much less of the average household budget than they used to, but those big three take up much more. It makes it hard to save enough for the future when you feel so much pressure in the present.

A lot of folks on here are saying they can't afford retirement savings, but I'm sure we can all afford something. I scrape by on 16k, but still put away $50/paycheck pretax to get my company match. They do 50% for the first $1000 I put in. Next year it's that plus a discretionary match of 3%, then 4% the next year, and so forth up to 9%.

I know saving at that rate won't fund a cushy retirement, but it's free money that encourages me in the practice of saving for myself, and the only place you can get that return with such low capital. As my pay increases, so will my contributions, and I'm sure I'll at least end up better off than most of my generation.

Canadian here. Retirement is not a priority for me because I understand that the concept of retirement held by my parents and grandparents is simply unfeasible. We are moving into an era in my country where the old outnumber the young, and much of my taxes will go to palliative care for my parent's generation. There will be a vacuum of workers in important areas (this is occurring already in some skilled trades), and there won't be enough people to pay into the business and government retirement funds to keep people living the life that they were accustomed.

Does this irk me a bit? in a way, but I've been assisted greatly by the medical system here, especially when I was a young child, so I have no problem with assisting paying for other people's care. Instead, I decided to go into a working field that I enjoy. I don't worry about retirement because I am looking at working a job I love, and a job that I look forward to going into work every day. I'm still in school (applying for master's degrees), but I'm already getting some work experience and I love every minute.

Many people that I meet in my generation in my country feel this way. We understand that retirement's not really going to be an option, so we might as well work until we die at a job we can at least tolerate, unlike my parents (my dad knows exactly how many years, months days and hours until he retires).

I get your point, but the same can be said about any point in your life. Becoming disabled is a game changer no matter what.

I want to set the age tone before I tell this story. My grandmother had children young and my parents had me when they were 16. She will be 71, I will be 33.

My grandmother worker her whole life in a Catholic nursing home. She went on disability when she was 63 because she needed double knee replacement surgery. The nursing home was sold while she was on disability and her earned pension "disappeared". The company settled for 10% of what she had in her pension. Even though she had a lawyer and all of the appropriate documentation, the pension money didn't exist anymore.

She'll be 71 this June. She works as a house keeper for a few different families to make ends meet. She has always been a supremely frugal person. I think you have to be when you have 4 kids. There is no "tightening your belt" for her. She has always lived off the bare essentials. Pre-paid cell, no home phone, no cable, no internet, old ass paid for used car, paid off mortgage.

Everyone in my family lives "hand to mouth" so helping her financially is very hard to do.

My grandfather on my mother's side died at 69 of a pulmonary embolism. He lived a healthy lifestyle, but hereditary heart disease took him anyway. He worked as a mechanical engineer until the day he died. My grandmother on my father's side got fucked out of her earned retirement and works as a modern servant to pay the bills. Her husband divorced her about 10 years ago to marry his mistress. He is the same age. He had to declare bankruptcies last year after medical bills from hereditary heart disease ate up all of his money and debt got beyond control.

What's the point of my story? Prepare if you can afford it, but have no dissolution that you control your fate. I too have heart disease and earn a moderate income. I live life to fullest I can because I want to enjoy what I know I have now. I participate in all forms of adventure sports, because it's what I enjoy. Sky diving, rock climbing, kayaking, motorcycling... you name it.

But, yeah, this is far too common. Just two weeks ago a dear friend of mine died, about a year after him and his wife retired. They met in a job they both hated and stuck it out for 15 years and retired together. They got one year, one fucking year, to enjoy themselves and now she is alone with not a whole lot going on. They had such awesome plans. It breaks my heart.

It's a hard rut to get out of. You try to live below your means so you never go on the dream vacation or buy the billiard table you always wanted. Then, When you're finally secure enough to start enjoying things, Cancer. Or a bus. Or any number of things.

And your retirement account gets parceled off to your relatives that will us it to go on their dream vacations before living paycheck to paycheck again.

I'm terrified of this. That's why I'm socking away 30% of my pretax income for retirement, saving 30% towards a house downpayment in the next two years, and then bumping up my retirement saving to 60%. I want to be young enough to enjoy my retirement.

This is a good point, and there are some factors involved. One is that you have a responsibility as a worker to not only be good at your job, but also to keep up with advancements in your field and be as knowledgeable about them as possible.

Another factor is that people are afraid to hire older workers now because they "turn into a pumpkin" at 65. so if that guy is 50, then you get 15 years of work out of him (maybe), as opposed to someone who is 40, who gets 25 years of work. The cost-benefit analysis lean towards younger workers, obviously. The likelihood is that as we continue on through our forseeable future we are going to have more people staying in positions longer, and people working longer into their "autumn years", because we just won't have the skilled employees to replace them (even taking into account a rise in immigration from developing countries). I don't have any specific source numbers on this because I wasn't expecting this comment to blow up, but the mass of "baby boomers" in our population charts really has a big effect on how we have to deal with employment in the future.

Why save for retirement healthcare when the hospitals are going to gouge you for as much money as you have anyway with ridiculously pricing. And the funeral home is going to rip off your family for as much as they can guilt for from the estate. Take care of yourself while you're living with better food and quality of life and hope for a quick death.

Indeed. With health care costs being what they are, and with jobs being as volatile as they are, it makes sense to plan your finances as a hedge against bankruptcy. Keep as many of your assets as possible in things that are protected.

For example, where I'm at in Texas, creditors can't seize the equity in your home in bankruptcy. The only time you can have you house seized is for things relating to the house, like mortgage or HOA dues, or for court-related things like child support and criminal fines. But for ordinary consumer debt like medical bills and credit cards, all the equity in your home is completely protected.

Let's say medical expenses wipe out all of your checking/savings and the only thing you have left is a $250K 'protected 401k' but you still have $500k in bills, how would you be able to leverage that without them taking it the moment you withdrew it?

I really hate myself for agreeing with you. I would declare bankruptcy before emptying my retirement account to pay off a medical bill. I'm really sorry, but if I say anything otherwise I would be lying.

Maybe we can schedule a "retirement fight to the death" where a group of people all save a predetermined amount (say 100k) and then put it into a pot and the winner of the retirement fight wins the full amount to retire and inherits everyone's assets and everyone else is dead anyway.

I'd rather save for life, rather than a few years before death. I don't want to retire, I want to keep working doing something that's worthwhile. If I can work the way I do now until I die, I'd be fine with that. The problem isn't our unwillingness to save for retirement, it's our willingness to place some kind of golden carrot status on retiring. Our entire system (in the US, anyway) is set up to take away all of your assets if and when you become incapacitated and need to rely on the system for health care, so I don't plan to save "for retirement". I save for emergencies, or for large purchases, or for the lean times, but I don't plan to retire.

This is how I feel. When I am in a better position to invest, the money will go to short-term investments. I don't want money sitting in a 401k until I am 60 and can access it. I want to live life now, not later. I am debt free and have a good deal of cash sitting in my bank (I get 4% on it, which isn't bad) and I like having access to my money for emergencies.

If you're self employed, I can possibly see this, although it can get harder to keep working as you get older. If you are relying on someone else for employment, I wouldn't expect them to keep employing you past 67.

Considering the median US salary is something like $50-55k, a new car might run ~$20k (for a sedan), and the fact that many Americans waste unfathomably large amounts of money on long commutes, it's not an uncommon correlation.

I tried to get food stamps because I'm barely working...my measly $8,000 IRA disqualifies me. So...they want me to spend it first. Uh huh...50% penalty for early withdrawal, then regular income tax on what's left. THEN I can get food stamps. Sounds like a great idea to me! Ramen for dinner again. By the way, I rent a room in a house. This is really what I wanted at this stage in my life! Soon I'll be forced to buy health insurance I can't afford. There goes the ramen...

It really should take some priority somewhere on the list. Even if it's a small contribition like 1% of a monthly wage, invested correctly it will grow. I just think it's important to plan ahead to be able to look after yourself.

Thank you! Most people get paid shitty, have shitty health insurance, and their employer doesn't match shit. Most people don't have careers, they have jobs. I've been working for 16 years and I probably just started earning enough money to really start saving about 2 years ago.

Edit: Though I should say, some proper money management education can go a long way, its just hard to make it work.

Can you manage 4% though? If you sock away $1k/year ($83/month, or probably what you're paying for your cell phone) and it returns 8% on average for 40 years, at the end of it you have over $250k. If you go another 10 years, you're at over $570k.

And if you're starting your career in your early 20s, 50 years is not entirely unreasonable to work today. It doesn't take insane amounts of money to save up.

Oh and that $20/month? Even if that's all you put away, after 50 years you'd still have over 6 figures socked away.

Can you secure a definitive return of 8% for 50 years? I am only 29 and have already seen 2 recessions. (I hope that question doesn't come across as snide or sarcastic because I am genuinely curious. I am trying to learn more and get better at saving.)

8% average annual return over a long time period? Probably. It's the historical return of a reasonable balanced investment portfolio; if you have a responsible allocation in your retirement accounts of stocks and bonds - index funds, don't go picking them - it's not unreasonable to project something like that when estimating what the future will bring.

So again, guaranteed? No, but if you look up the returns over the past century or so, even with and during the dips that happened, numbers that big and bigger show up time and again.

Not sure how to do this? Open an IRA (traditional or Roth, depending on your circumstances) at Vanguard and put $1000 into the target date fund that most resembles when you intend to retire. They'll do the re-balancing for you.

Cool, I'll look into it. Thanks for the advice! I know I was pretty aggro in my earlier comment but I think a lot of people online don't understand that a lot of people are stuck paycheck to paycheck, with savings-draining high deductable insurance with no dental coverage.

I really appreciate your advice and will genuinely look into it. Thanks again!

Absolutely. Especially over a 50 year period. If you are investing the same amount every month, the periodic pullbacks don't hurt you because you just accumulate more shares when prices are low. If you are putting money into a 401(k), that money is pre-tax dollars, so you don't even have to hit 8% returns because not paying taxes on those dollars gives you a few percentage points up over post-tax dollars. I've been investing in my 401(k) since I turned 21 in 2005. So I have "the greatest recession since the great depression" square in the middle of my investment period... Two of my top holdings (Investment Company of America and the American Balanced Fund) have over 9% annualized returns even with a huge recession right in the middle of the term.

I'm not American (Canadian), but I'm 27, have been working for 4 years now at my career, and my whole goal in life is to save as much as I possibly can, and retire at 50. I may be in the minority, but I really can't imagine people not at least somewhat saving for retirement.

My parents are freaking out about retirement. My mother will likely never be able to retire. My dad has had serious chronic health problems for 20 years (still going strong). My parents have had to take money out of their retirement multiple times to just make basic bill payments.

They've never been big spenders. They are essentially the people who went for the early bird special and split a plate because 6.99$ is a lot for one meal. They've just always had bad luck with my dad's health and getting lemon vehicles (checked by the mechanic before hand!), even our house is garbage. We've had to spend thousands fixing things which two home inspectors missed. Every year it's something new. This month was replacing the furnace which was "guaranteed" to last at least 20 more years but died in 8 years. They plan to just dump the house soon and move into senior citizen housing.

It's a hard knock life.

Lucky for them they have 4 kids. So hopefully any burden on us is split four ways so we can really help them. My older siblings are doing well and my twin brother and I are currently in school (avoiding as much debt as possible.)

Meanwhile my aunt for example just sold her second house and bought a new house, has gone on three different vacations this year (other side of the country), spends like crazy in general including two new cars for her and her spouse.

Shes now worried about her finances but is thinking of retiring before she even turns 56. Shes completely nuts.

Part of the reason is that congress pretty much let Wall Street do whatever they wanted, resulting in them screwing over the common man in order for personal gain. Why should I have any faith that this wont happen again and decimate my savings?

That being said, I have been contributing to a 401(k) since I graduated college and am relatively pleased with it. Although, I am still paranoid that the market will tank again and I'll lose half my money.

A year ago, I decided that my company's non-matched 401(k) that only offered high-load, underperforming shit-tier funds wasn't worth funding. I thought I could beat the tax penalty and the fund performance investing on my own, so I opened a cash brokerage account.

I reported a net capital loss for 2012 (although I didn't sell the securities that were actually performing well).

Then my company got bought out, and we have an awesome 401(k) with 50% matching up to 3%, so I'm putting 6% away again.

Honestly the idea if saving enough money to retire is a very recent idea. Prior to that we had family to rely upon. You worked until you were too old to work and your kids/grandkids helped take care of you. That has been the cycle for 99.99% of human history. We took care of our old, weak and young. I honestly think the idea of saving enough for retirement is a little bonkers. Not that I disagree with the idea itself in todays day and age. But I find it weird that I have to save 10-20% of my small paycheck to pay for a retirement. I don't know how I will feel when I hit 67 but I can't imaging being in retirement for 20-40 years after I leave the job market. There is only so much money I can save for retirement, which will mean my days will be spent watching tv and going on long walks.

I am not rich by any stretch of the imagination and I feel a bit depressed about the prospect of getting old and retiring. Even if I save 25% of my current pre-tax income and get a overly optimistic 9% return every year, this will still not leave me with enough to do too much after I retire. I think it would be a different story if I knew exactly how much time I had left to live, but I have to budget even harder in retirement now because for precisely that reason. I don't know how long I will have to live!!!! It maybe 5 years or 45 years. I don't want to end up in a dog house eating dog food and relying in the state for care. :(